from the unfortunate dept

We've covered parts of the various lawsuits against Grooveshark by the recording industry. I have no idea how those lawsuits are going to turn out, but a bit of a sideshow in one is touching on issues that are extremely important around here: the right to protect anonymous commenters, and shield laws protecting journalistic sources. Last fall, in the latest effort by Universal Music against Grooveshark, the company quoted an anonymous comment from a blog post on the popular music industry blog, Digital Music News. The comment claimed to be from an employee at Grooveshark, and reads (in part):

I work for Grooveshark. Here is some information from the trenches:

We are assigned a predetermined ammount of weekly uploads to the system and get a small extra bonus if we manage to go above that (not easy).The assignments are assumed as direct orders from the top to the bottom, we don't just volunteer to "enhance" the Grooveshark database.

All search results are monitored and when something is tagged as "not available", it get's queued up to our lists for upload. You have to visualize the database in two general sections: "known" stuff and "undiscovered/indie/underground". The "known" stuff is taken care internally by uploads. Only for the "undiscovered" stuff are the users involved as explained in some posts above. Practically speaking, there is not much need for users to upload a major label album since we already take care of this on a daily basis.

To be honest, when I saw the original filing mentioning this comment, I was pretty surprised that Universal would use it in the lawsuit. After all, it's an anonymous comment on a blog. It's pure hearsay, without any actual evidence that the commenter actually works at Grooveshark. It's completely useless as evidence.

Of course, you might think that Universal Music would then issue a subpoena to discover who the commenter was. But... instead Groovesharkissued a subpoena (pdf and embedded below) seeking to identify the commenter. This is also strange. If UMG was able to identify the individual, then Grooveshark would find out that info. But if (as appears to be the case so far) UMG does nothing, the claims by this individual are useless in the lawsuit anyway.

Either way, Paul Resnikoff from Digital Music News worried about the subpoena, as DMN has a policy of not revealing its anonymous commenters (and often using them as sources). So, he decided to push back, noting a few key points. Public Citizen's Paul Levy recently agreed to represent Resnikoff in this matter and sent a letter to Grooveshark's parent company (embedded below) detailing why Grooveshark should stop barking up this particular tree. Beyond the First Amendment issues, the right of a journalist to protect sources, and the uselessness of the original comment in the first place, there's also the simple fact that DMN doesn't retain comment logs for very long, and has no useful information in response to the subpoena anyway.

That letter also highlights that Grooveshark is also interested in a much more recent comment on a blog post about Grooveshark's subpoena, in which a commenter (in a rather difficult to read manner) spins another conspiracy theory, suggesting that the original comment was a setup against Grooveshark by supporters of the lawsuit. To be honest, this comment seems about as credible as the original comment that kicked this off.

Whatever you might think of the Grooveshark lawsuit, this action by Grooveshark's lawyers seems like a mistake and overkill. Not only is it unlikely to turn up anything useful, going on a fishing expedition against anonymous commenters on a blog opens up a huge host of problems around First Amendment issues, which it appears Grooveshark either failed to consider, or doesn't much care about. That seems like a mistake.

from the how-censorship-works dept

Want just a glimpse of the future under SOPA, should that bill pass? Over in Denmark, where the local anti-piracy agency Antipiratgruppen has been successful in getting courts to order ISPs to block access to sites like The Pirate Bay, it appears the group is now targeting Grooveshark for a similar blockade. Of course, Grooveshark functions no different than YouTube functions. It obeys the DMCA and takes down content when requested. Users do upload their own music, just as they do on YouTube, and Grooveshark has done some additional licensing deals -- such as with EMI. But apparently, rather than deal with the actual law, the group in Denmark just wants Grooveshark added to the country's blacklist. Apparently, the fact that there's tons of legal music on the site is meaningless, just so long as one group declares that the site is dedicated to infringement. That, of course, is exactly what SOPA will allow as well. Make an accusation and you can totally shut down a competitive startup. In fact, some have responded to this lawsuit by noting that it came after competitor Spotify (which is owned, in part, by the labels) entered the market, suggesting that the timing of the attempted blockade is no surprise, and that's it's really more about clearing the decks for the RIAA's own offering.

from the that's-not-how-it-works dept

Grooveshark has been involved in a series of lawsuits from the recording industry and, as with the Limewire lawsuits, it looks like the music publishers are piggybacking on the labels by suing later. We've already explained why Grooveshark appears to follow the rules set out by the DMCA, but I would imagine that Grooveshark is the sort of site where judges simply won't like the idea of it, and will thus figure out a way to rule against it. That could be very problematic.

To make their case, the publishers are trying to claim that Grooveshark is not a service provider for the purpose of the DMCA. It's going to be difficult to have that claim stick, as courts have generally (correctly, in our opinion) deemed a wide spectrum of offerings to meet the "service provider" hurdle. And then the lawsuit gets even sillier. It claims that Grooveshark itself is doing everything that its users are actually doing. It's as if the publishers wish to simply pretend that the DMCA doesn't exist and that liability automatically applies to the service provider.

I think it's difficult for anyone to argue that Grooveshark is any different technically from YouTube, but when it comes to these sorts of things the industry isn't known for actually understanding what these offerings are really about, preferring instead to leap straight to the freak-out-that-must-be-illegal stage...

First, the company makes the distinction between "licensed" and "legal":

First, there is a distinction between legal and licensed. Laws come from Congress. Licenses come from businesses. Grooveshark is completely legal because we comply with the laws passed by Congress, but we are not licensed by every label (yet). We are a technology company, and we operate within the boundaries of the Digital Millennium Copyright Act of 1998 (DMCA). Some would have you believe that those of us who use the DMCA to innovate are inherently infringers and that claiming Safe Harbor under the DMCA is as good as admitting guilt. Not so.

The DMCA's Safe Harbor component encourages technology companies to innovate in hopes that they will eventually solve some of the problems that are plaguing content producers today. The Safe Harbor provision reads like it was written specifically for YouTube and Grooveshark, and its necessity continues to be illustrated every day. If it weren't for this notion, many of the products and services that are now taking a bite out of piracy would never have been born.

While I agree with the importance of the DMCA's safe harbors, and the idea that they are important to encourage innovation, Grooveshark is being a little misleading in the whole licensed/legal arena. It really should go into more detail. The way Grooveshark operates, is that (like YouTube), users upload content, which others can then stream. Grooveshark works to abide by the DMCA to discourage and takedown infringing material -- and notes that it has taken down 1.76 million tracks and suspended 22,274 users who abused the system. As it notes, those are "not the characteristics of a company 'dedicated to copyright infringement.'" It also pays performance rights organizations for the streaming content.

The real issue is whether or not the users have the rights to upload the works. That's where the licensing aspect comes in. Grooveshark has been trying for a while now to get record labels to agree to effectively offer a blanket license to its users, so that they can upload those songs, and the labels can then make some money off of the usage as well. In some ways, it's like YouTube's ContentID system, in helping labels monetize their music that users are hoping to share. Both EMI and Universal Music have sued Grooveshark, with EMI dismissing the case after agreeing to a license. Universal Music is still fighting the lawsuit.

So, effectively, the way Grooveshark is structured today is that its users might infringe on copyrights, and the company keeps seeking licenses that would make those uses authorized. The somewhat open legal question is whether or not Grooveshark itself is liable as well. It claims that it follows the DMCA safe harbors and is protected (and, for that reason, I'm sure is very, very, very interested in the eventual outcome of the YouTube/Viacom lawsuit concerning the overall contours of the DMCA safe harbors). The labels, I'm sure, claim that Grooveshark is "inducing" infringement through its overall design.

Not surprisingly, I think Grooveshark presents an interesting legal situation, which should be legal under the DMCA. Unfortunately, the courts often get a little wacky when it comes to interpreting the law in these situations. If YouTube continues to prevail over Viacom, Grooveshark is in a much stronger legal position. If the appeals court reverses, however, it may have more trouble. Of course, given all this, it is somewhat amusing that Google would dump Grooveshark, suggesting a violation of its terms of service. If Google is arguing that YouTube is legal, you would think it would recognize that Grooveshark relies on the very same line of legal logic.

"This [personally identifiable] information may also be kept longer than 6 months by EMG if a user is found by EMG's soul judgment to be suspect of carrying out illegal, unlawful, or dangerous actions with or in this service. Prior to keeping IP address information for more than 6 months, the user will be notified via email about their suspect status."

The privacy policy still says that, though Dante also grabbed a screenshot.

Somehow, I don't think Grooveshark actually intends to judge a person's immaterial soul for evidence of suspicious activity. But, lest you think it's a lone typo, the phrase "soul purpose" also appears later in the policy.

"EMG may allow 3d parties to place cookies and other tracking technologies, such as web beacons, clear GIFs, web bugs, tracking pixels on the Site for the soul purpose of allowing that 3d party to record that a User has visited the Site and/or used the Service."

I think they meant "sole." Somewhere, in the depths of my own soul, it feels like somebody was relying on spell check a bit too much...

from the time-to-move-to-the-open-app-market dept

As a whole bunch of you have been submitting, apparently Apple yanked Grooveshark's iPhone app after receiving a complaint from Universal Music, one of the record labels who has sued Grooveshark, and is claiming that it has not properly licensed the music. Grooveshark has argued for years that what it's doing is legal, but multiple record labels have disagreed. Still, Apple wants to keep the major record labels happy, so bye-bye Grooveshark. Perhaps they should explore creating a web app and putting it on something like the OpenAppMkt, since that's outside of Apple's control...

from the and-so-it-goes dept

We've discussed in the past how the record labels have this habit of "negotiating through lawsuits," in that they will often sue an innovative music startup, even as they're negotiating licensing deals with them, just to get the upperhand in the negotiation. It's happened with countless music startups -- and it's one of the main reasons so few survive. They're overly burdened with ridiculous costs from the beginning. We already saw that EMI used this strategy with Grooveshark, in forcing it into a licensing deal, and apparently Universal Music decided it could do the same thing. It's now suing Grooveshark as well -- even though Grooveshark insists it pays all the appropriate licenses. Of course, the end result of all this is that it gives Grooveshark more publicity, but may make it more difficult for the company to survive.

from the all-in-the-negotiation dept

We've noticed a troubling trend in how legitimate online music services are being pressured into deals with the major record labels. The labels begin the negotiations on licenses... and then sue the company. That, of course, makes life difficult for the startup, which is then pressured to offer even better (read: ridiculously onerous) terms to the labels. We've seen it happen over and over again, and saw it happening when EMI sued Grooveshark this past summer. And, of course, a few months later, the lawsuit is dropped and a licensing deal has been reached, though you can bet the terms are not quite what Grooveshark originally intended. That's what happens when part of the "negotiation" involves a lawsuit.

from the it's-why-they're-so-lovable dept

We've noted in the past that the record labels have a pretty well established operating procedure when it comes to "negotiating" with startups that are actually doing the innovative things in the music delivery and promotion space. They open "negotiations" with these startups... and then after a certain point, they file a lawsuit. It's purely a negotiating tactic (and a way for record label lawyers to keep busy), that makes the "negotiation" a lot more antagonistic, and often ends with the startup agreeing to give up way too much. Warner Music perfected this trick, such as when it sued iMeem only to then invest in the company as part of the settlement. Of course, because iMeem had no choice but to cave in order to deal with the lawsuit, the terms of the deal were so onerous that iMeem nearly went out of business -- until Warner Music wrote off the investment and recently renegotiated.

As unbelievable as it may be, the major record labels apparently don't recognize that "deals" negotiated at the end of the barrel of a gun tend not to work out very well in the long run. They're certainly not mutually beneficial.

And yet... the process continues. While Warner Music has done a bunch of these sue-to-negotiate deals, EMI seems to be involved in many of the more recent lawsuits of this nature. Its latest target is GrooveShark, one of a bunch of sites that lets you listen to streaming music online. Apparently the two companies had been negotiating terms... and then suddenly EMI sued. Par for the course. In the meantime, if you're a music startup hoping to do a licensing deal with a major label, make sure you have some litigators on your legal team. You're going to need them.